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October 25, 2008

While much of the media attention during Indian Prime Minister Manmohan Singh’s visit to Japan this week was focused on a free trade deal the two sides failed to agree on, another pact that could have even greater consequences for the region was quietly pushed through.

This was a security cooperation agreement under which India and Japan, once on opposite sides of the Cold War, will hold military exercises, police the Indian Ocean and conduct military-to-military exchanges on fighting terrorism.

It doesn’t sound very grand, but its significance lies in the fact that pacifist Japan has such a security pact with only two other countries - the United States and Australia.

And it comes in the same month that India and the United States closed a nuclear cooperation deal that won New Delhi a place on the world’s nuclear high table, ending three decades of isolation following its first nuclear tests in 1974.

And finally if you remember that India, the United States, Japan , Australia and Singapore held naval exercises last year off the Arabian Sea, you begin to see the outlines of a new security architecture for Asia, which according to some has the containment of China written all over it.

Call it what you will - a league of democracies perhaps - but the idea of some of the most powerful navies in Asian seas exercising together points to a dramatic shift of alliances, one that would have raised an eyebrow not just in Beijing and Islamabad, but other regional capitals such as Jakarta and Bangkok.

A January 2008 report by the U.S. Congressional Research Service on the emerging security architecture in Asia involving India, the United States, Japan and Australia refers to the opportunities inherent in such a partnership but also to the limits of it as well as concern among those nations kept out of it. A PDF of the report is available here.Singh and his Japanese counterpart Taro Aso were at pains to stress their security pact wasn’t aimed at anyone, least of all China. “We regard security cooperation with India as very important … and we do not have any assumption of a third country as a target such as China, Aso said.

Singh was even more direct, saying India’s security and economic cooperation with Japan would not be at the “cost of any third country, least of all China”.

Indeed, there is plenty that binds both countries to China. Trade between India and China, as Singh told his hosts, had grown in the past year by an amount greater than the whole trade with Japan.

And then Japan, the only country to have suffered a nuclear attack, hasn’t yet fully overcome its sense of outrage over the Indian nuclear tests in 1998, which triggered nuclear tests by Pakistan.

An India-Japan nuclear cooperation deal, along the lines agreed with the United States, seems some distance away, given lingering reservations in Japan. Tokyo, as the The Mainichi commented, must continue to urge New Delhi to fully renounce nuclear testing.

So where does this all leave China and “all weather ally” Pakistan ? Should they be worrying about this new concert of democracies on their doorstep or is it just one more element in a fast-changing world that is getting harder to predict?

While parsing the Japanese media and official pronouncements, it would be good to bear in mind the concepts of Tatemae and Honne … that is, the distinction between facade and true feelings. While Japanese officials, diplomats and media may constantly call for India to disarm, that is their Tatemae; a continuation of policy so as not to relinquish the heavy stick of morality, which Japan uses wisely to protect and keep alive its stance against nuclear proliferation, as it is the only actual victim of nuclear attack to date. Its Honne position, the policy it actually would rather follow would be to go nuclear itself, to counter what it believes to be very real threats from China and North Korea. But it does not do so because it would inconvenience many cherished Tatemaes … viz. the Self-Defence force and the pacific image of Japan internationally post WWII. But Japan knows, that the inherent tension between the Tatemaes and the Honnes, will cause it to replace old Tatemaes with new Tatemaes … hence a few Honnes or realistic policy changes will have to be made. And vis a vis China it is doing so, by entering into a new security arrangement with India. It is calling it a co-operation … another Tatemae, when in actuality it is a tacit approval of India’s nuclear and geo-strategic positions. It is also a bait to switch India’s ambivalence to concrete participation in the Arc of Democracies. Like everything, the Japanese like to play diplomacy too … gradually, while savoring each moment with a sip of sake. It is like a game of Go with China.- RAVI KUMAR-

As someone who studies gender in politics and international relations, I have been following the recent events in South Asia with great interest and disdain. The reports on communal violence in Orissa, violent politics of the Maharashtra Navnirman Sena (MNS) in Mumbai, the war in Sri Lanka: all of these remind me of prominent feminist scholar, Cynthia’s Enloe’s pertinent question, ‘where are the women?’ Each of these events and the debates around them are gendered, and yet there is no analysis that throws light on the fact that violence in Mumbai, Orissa or even in Sri Lanka is part of the militarised and macho politics of a male centric worldview. All of these events tell us how deeply entrenched the gendered hierarchies and norms are in our socio-political environment. The masculinity of our ‘God loving’ political and religious extremists and terrorists does not make them ‘God fearing’ as they wreak havoc and rape nuns (and when questioned audaciously tell the world ‘she’ consented to the sexual orgy!), in their service to their religion and God. The rage that I have felt, I am sure has been experienced by other women and men too. Which God gave you the permission to rape and kill? Which or whose ‘religion’ were you representing or ‘protecting’? What happened to the social and political contract we (women included) had with the state, that in return for the sovereignty and powers we bestowed on it, we would be protected and our human rights guaranteed?

It bothers me that while we so easily classify wars and terrorism as religious, political and economic, we never think of gender as a category. Women are at the receiving end of the violent masculinist politics of extremist groups. I do not think it necessary to remind the informed readers of this column how rape is often the big weapon in these macho wars of supremacy. Women’s bodies become the territories on which the warring sides play out their ideologies. In South Asia we have see how rape has been a war strategy in communal riots like in Gujarat and Orissa recently, as also in inter-state wars like in 1947 between India and Pakistan and in 1971 between East and West Pakistan. Further, militarised masculine states in the region have made women’s cultural identities the battle turf. The Taliban needed the women to be veiled and excluded from public spaces, while in Colombo the Tamil women must not wear the ‘pottu’ (the red decoration on the forehead) to avoid harassment and humiliation by the agents of the Sinhala chauvinistic state.

The ‘hudood ordinance’ of 1979, in Pakistan, targeted specifically at women, was part of then military ruler Zia-ul-Haq's Islamisation programme. Based on Shariah laws, the ‘hudood ordinance’ ensured that hundreds of women were subjected to rape or even gang rape and were eventually accused of adultery and incarcerated. This, along with honour killings, has been defended as punishment ordained by God. The rape of Bangladeshi women was part of the 1971 war strategy of West Pakistan and was deployed together with ‘effeminising’ the Bengali males. The Bangladeshis were not ‘Muslim’ or ‘man’ enough and their masculinity had to be restored through the rape of their women. The Indian state has been no better than its neighbours in the ‘gendered’ wars it has waged in Kashmir and in the North East, not to forget the rape of Sri Lankan women by the IPKF. The agents of the state enforce the state’s diktat through harassing and raping women. Gujarat and Orissa are recent additions in the states’ ‘gendered’ wars because the perpetrators were aided by the states’ inactivity and apathy. In Orissa, when innocent citizens were being subjected to hooliganism and violence and women being humiliated, the state and the central governments were busy levelling charges at one another and debating the necessity of ‘President’s rule’, to score political points (not withstanding that the President is a woman herself!).

It will also not be appropriate to claim that women have nothing to do with these ‘gendered’ wars and are mere ‘victims’. Women have participated in male orientated violent projects, voluntarily and sometimes through various forms of coercion. From the LTTE’s women cadres to the female Afghan suicide bombers, from the women who have supported the militancy in Kashmir to the women activists of the Shiv Sena, Maharashtra Navnirman Sena (MNS) and the Rashtriya Swayamsevak Sangh (RSS); these women have been perpetrators, planners and patrons of violence and compel us to look at the gendered composition of violent conflicts, an otherwise neglected terrain. Even as I write this, news is pouring in about the 38 year old ‘sadhvi’, Pragya Singh Thakur who along with two radical Hindu activists has been arrested by the Maharashtra Anti-Terrorism Squad (ATS), for her suspected role in the blasts in Malegaon and Modasa. The Shiv Sena Mahila Aghadi (women’s wing) and the RSS (Durga Vahini) women have consistently dispelled notions of women’s passivity or their agency appropriated by masculine ideologies and have shown how women challenge and displace gender hierarchies in violent nationalisms.

My recent research on the conflict in Kashmir also reveals that Muslim women, like their aggressive Hindu counterparts also contribute to violent militant projects. Women in the Kashmir Valley have led protest marches, aided militants, engaged in gun running, organised funds and carried out ideological propaganda on behalf of the militant groups. They have also invoked traditional feminine reproductive roles in their political pursuits as they shouted slogans (during the peak militancy period of the early 90s) like Pakistan jayenge, do roti khayenge, pet mein mujahid leke aayenge, (we shall go to Pakistan, we shall eat two chapatis, we shall get mujahids or warriors in our wombs!). In Sri Lanka, Muslim, Hindu, Christian and even Buddhist women have realised their agentive moments and fulfilled their political and personal aspirations through violence and terrorism.

The gender blindness of our everyday lives is reflected in our political discourses. Gender is never thought of as a category of analyses, and women, their politics and their concerns are pushed into the backstage. It is disheartening to see how the conscience of the society and polity remains unaffected when men in the name of religion or politics rape and kill women, or when women participate and collude in violent and exclusivist ideologies. The modern day ‘terrorists’ have religious and national identities we are often reminded, but there is no mention of their ‘gendered’ constructions (as men and women with specific roles fulfilling social norms and expectations which are then reflected in different and dangerous world views). Because I like to end with quotes, here is one from Ellen Goodman - “I am woman, hear me roar. It's not always a pretty tune.” When will we begin to hear these pretty and not so pretty tunes?

*Swati Parashar is a PhD Candidate at the Department of Politics and International Relations, Lancaster University, United Kingdom. She can be contacted at swatiparashar@hotmail.com

One of the questions in the fight against terrorism is whether the United States needs a dedicated domestic intelligence agency separate from law enforcement, on the model of many comparable democracies. To examine this issue, Congress directed that the Department of Homeland Security perform an independent study on the feasibility of creating a counterterrorism intelligence agency and the department turned to the RAND Corporation for this analysis but asked it specifically not to make a recommendation. This volume lays out the relevant considerations for creating such an agency. It draws on a variety of research methods, including historical and legal analysis; a review of organizational theory; examination of current domestic intelligence efforts, their history, and the public's view of them; examination of the domestic intelligence agencies in six other democracies; and interviews with an expert panel made up of current and former intelligence and law enforcement professionals. The monograph highlights five principal problems that might be seen to afflict current domestic intelligence enterprise; for each, there are several possible solutions, and the creation of a new agency addresses only some of the five problems. The volume discusses how a technique called break-even analysis can be used to evaluate proposals for a new agency in the context of the perceived magnitude of the terrorism threat. It concludes with a discussion of how to address the unanswered questions and lack of information that currently cloud the debate over whether to create a dedicated domestic intelligence agency.

After buying a raft of sub-contractors of American intelligence agencies, DC Capital Partners is setting up a new holding company devoted to private security.

The American equity firm DC Capital Partners LLC has, in two quick moves, hired a former head of the CIA’s National Clandestine Service, Jose Rodriguez (IOL 579) and snapped up Multi-Threaded Inc., a small group specializing in unstructured data management. Multi-Threaded has been incorporated into the DC Capital holding company that encompasses all of its intelligence assets, the National Interest Security Company (NISC, see graph below).

At the same time, DC Capital is putting together a new holding company specializing in security, training and logistics. Named Elite Training & Security, LLC, its center-piece will be made up by the Kaseman LLC group. A regular supplier of the State Department and Department of Homeland Security, Kaseman furnishes anti-terrorist services and sees to the construction of secure buildings (embassies), notably in Afghanistan, Iraq, Pakistan, Indonesia and Colombia. DC Capital is planning other acquisitions in the sector and briefly thought of buying out Triple Canopy (IOL 566).

Thomas Campbell, founder and president of DC Capital, says he is also preparing to invest in the fields of open source intelligence, cyber-security and biometrics. His board is made up essentially of former senior CIA and Pentagon officials, and he can count on a powerful network of retired generals working for the Spectrum Group consultancy, in which he bought a controlling interest last year.

There is no doubt that the world has shrunk and has become a global village and many members of this global community are facing similar problems. Some counties have willingly or unwillingly chosen a path as a solution to their troubles, while others have ignorantly adhered to their policy of denial and are facing turmoil.

Indonesia and Pakistan have many things in common; both the countries have a Muslim majority, both gained their so-called freedom after the Second World War, both have a history of occupying other nation's territory, both the countries have been ruled for most of the time by military dictators and both the countries' natural resources have been utilised for the benefit of the dominant ruling nation.

Because of these similarities some Baloch intellectuals are trying to give an impression that the Baloch nation is willing to solve their dissatisfaction with Islamabad on the line of peace agreement between the government of Indonesia and the Free Aceh Movement (GAM)/ Aceh Sumatra National Liberation Front (ASNLF), mediated by the former Finnish President Martti Ahtisaari. Under the agreement, Aceh would receive special autonomy and government troops would be withdrawn from the province in exchange for ASNLF's disarmament.

When we, the Baloch look at the history of Indonesia, we need to ask ourselves; with whom does our heart beat? With whom do our aspirations flow? With whom our history has similarities? Before we jump to any conclusion or suggest any solution to the Baloch question, we should acknowledge the public opinion of our nation. We should know the dreams of our elders, aspirations of our youth and hopes of our children. We should know the objective condition that surrounds us and the strategic importance of our land in the global war for energy.

Baloch nation has gone through a lot since March 23, 1948, when the Pakistan army moved in and occupied Kalat, the capital of the free Balochistan. After experiencing only 227 days of freedom in which we elected our representative assembly and wrote a constitution as a free nation of this global village. Pakistan's army trampled every thing under their boots - Baloch nation's pride, freedom, representative assembly, constitution and mostly our mother land and declared it a part of Pakistan. Similarly in 1975 East Timor lost its freedom after being free for nine days from Portugal. The puppet regime installed by Indonesia in East Timor, after its invasion, endorsed the integration of East Timor into Indonesia. Thus, on July 17, 1976, East Timor officially became the 27th province of the Republic of Indonesia.

Similarity between East Timor and Balochistan does not stop there, during the time of their decolonization; cold war became a hurdle for both to become a free nation. Washington expressed its concern over East Timor, because Indonesia was an ally in its war in Vietnam and it did not want to see the vast archipelago destabilized by a left-wing regime in its midst. Gough Whitlam, Australia's Labor Prime Minister told Suharto that an independent Portuguese Timor would be an unviable state, and a potential threat to the stability of the region, and he considered integration with Indonesia to be in Portuguese Timor's best interests. In Balochistan's case a memorandum dated 12 September, 1947 was sent by the British Minster of the state for the commonwealth relations to the United Kingdom High Commissioner in Karachi in which he was asked to do what he could to guide the Pakistan government away from making any agreement with Kalat which would involve recognition of the state as a separate international entity.

The solution to Baloch national question can not be found confined to the administrative boundaries defined by Pakistan. Baloch nation historically never accepted the Goldsmith Line (1871) nor has it ever recognized the Durand Line (1893), commissioned by the British Raj to stop the Russian influence in the region. These artificial boundaries may have divided the Baloch into separate states but could not stop them from considering themselves a single nation. Today nobody can deny the strategic location of the Baloch land for peace and economic stability in the region. Robert G. Wirsing, in his article "Baloch Nationalism and the Geopolitics of Energy Resources", wrote, "A sizable hint of energy's gathering importance to the conflict in Balochstan was, of course, already apparent decades ago in the pages of Harrison's book." If it were not for the strategic location of Baluchistan and the rich potential of oil, uranium, and other resources," Harrison observed, "it would be difficult to imagine anyone fighting over this bleak, desolate, and forbidding land." Shrinking of the energy resources is the main factor in the instability of the world economy today, and because of it, wars were waged to secure them. The vast amounts of untapped fossil fuel reserves in Central Asia need to be channeled into the world market to stabilize its demand. All the projects to channel Central Asian fuel to the Arabian Sea or the IPI (Iran-Pakistan-India) gas pipeline to India and China run through Balochistan. Unless there is peace in Balochistan these projects will remain on paper. Even Pakistani writers like Shaukat Qadir in his article, "Strategic significance of Balochistan", accept the importance of Balochistan's strategic location. He wrote, "Analysts have frequently adverted to Pakistan's ‘strategic location'; linking the Middle East via Iran, Central Asia, China, and South Asia. While Balochistan provides the only direct link to Iran and onwards to the Middle East, the truth is that without Balochistan, the remaining linkages that Pakistan provides to other regions are reduced to less than half their strategic value, since the only other port at Karachi could never handle the magnitude of the potential commerce".

When the riches and the strategic importance of this land were not known to the world. when it was only a "bleak, desolate, and forbidding land" the Baloch nation called it its home. As a free nation it resisted domination and occupation by the Afghans, Persians, British and Pakistan. The last one hundred year history of Balochistan shows that it lost its freedom and was occupied by foreign powers but these foreigners never ruled Balochistan peacefully. Baloch politics has always been dominated by rebellions. Intermittently there were times when the Baloch elders tried to negotiate peace with the occupiers but it always left a bitter taste and a deep scar in the collective memory of the Baloch nation. Khan Kalat Mir Mehrab Khan's peace treaty with the British resulted in the martyrdom of Mir Mehrab Khan and the occupation of Kalat. The outcome of Mir Dost Mohammed Baranzai's peace negotiation with Reza Shah Pehlavi was the hanging of the Baloch leader and the occupation of western Makuran by Iran. The outcome of Prince Karim's acceptance for talks with Pakistan was a brutal crushing of the movement and long prison sentences for the Baloch leadership. Peace, even in the name of the Holy Quran could not change the fate of Nawab Nouroze Khan and his sons. Negotiations with General Ayub Khan resulted in incarceration and hanging of the Baloch leaders in Hyderabad and Sukker jails. Signing the 1973 Constitution of Pakistan by Mir Ghous Bux Bezinjo and Sardar Attaullah Mengal did not stop the ban on NAP and the dissolution of Balochistan Government followed by the military operation and the long term sentences in Hyderabad Conspiracy Case.

The people of East Timor fought against the occupation by Indonesia for 24 years. There were times when many of the Timorese thought that it was a lost cause, but Xanana Gusmão's Revolutionary Front of Independent East Timor (FRETILIN) never surrendered its demand for freedom. FRETILIN resisted the invading Indonesian army, suffering heavy losses at times; they retreated to the mountains to keep the struggle alive. The East Timor Diaspora, scattered around the world initiated a solidarity movement for East Timor which initially faced lots of problems but ultimately they won the international opinion in favour of East Timor. During the historical struggle for freedom there were times when FRETILIN was very weak but it did not surrender its demand for East Timor's freedom. FRETILIN never participated in any elections held under the supervision of the occupier; it never accepted Indonesia's occupation over East Timor. Both, the struggle inside East Timor by FRETILIN and outside the country by Solidarity Movement for East Timor brought the Indonesian government to its knees. Indonesia had no other choice but to accept United Nation mediation. On 30th August 1999 referendum was held under the supervisor of UN for East Timor self-determination. Defying threats and intimidation by Indonesia's army and its East Timor puppet pro-Indonesia militias, the majority of East Timorese voted for freedom. On 20th May 2002 East Timor became an independent nation on the world map.

History shows that Baloch nation's struggle for self-rule swung in different extremes during the course of its history from provincial autonomy to independence. Lacking political unity, wisdom and a clear vision persistent with the genuine aspirations of our people, the leadership confused long term objectives with short term gains and the nation suffered as a consequence. This is the fifth time that the Baloch nation has picked up arms to stop the military aggression of Pakistan, started 60 years ago, which clearly indicates that all other means have failed to make the rulers of Pakistan understand the realities of the Baloch nation. The recent revolt that started in 2004 at Dera Bugti and Kohlu has now spread all over Balochistan as a widely popular movement in the Baloch masses. Geopolitical changes in the region, modern communication network and a stark awareness of the fact that the Baloch as a nation faces the risk of being annihilated from the face of the earth. No wonder this new phase of struggle in Balochistan is popularly called the ‘Last War'.

Since the coming in power of the new so-called democratic forces in Islamabad, hopes for peaceful resolution to the Baloch conflict are being echoed from different quarters of the Baloch leadership. It should be clear to the Baloch masses and its leadership that these new so-called democratic forces are hand picked corrupt political managers of the old establishment which started the aggression on Balochistan sixty year ago. Within six months the new government installed in Islamabad had shown its ethical bankruptcy. President Asif Ali Zardari, leader of this new regime backtracked on his written agreement with his coalition partners saying, "Written political agreements are not binding like the Koran". Those Baloch leaders who think these new unprincipled corrupt political managers in Islamabad are sincere in solving the Baloch question are either politically naive or as devious as the new mouth organs of the old establishment, in either case they are damaging the Baloch national movement.

This is the final call for the Baloch leaders who claim to be nationalists. It's about time that they should get their act together and chalk out a clear cut program as per the desire of the nation. We should learn from the history of East Timor never to surrender our demand for freedom and keep the struggle live at any cost. Until and unless the forces against our freedom are brought to their knees, they will not accept our demand. It's not just the question of the Pakistani army top brass and its handpicked politicians, even the Pakistani intelligentsia is not yet ready to treat us the way Indonesia is treating Ache people. Daily Times editorial dated, 6th August 2008, commenting on Sanaullah Baloch's article, A lesson to be learnt, wrote, "One can say that Pakistan is in disarray today but it has not reached the state of Indonesian collapse in 1999."And it continues, "It would be extremely perverse to tell Mr Baloch that he may have to wait till the state of Pakistan collapses as completely as Indonesia did in 1999 before Balochistan becomes another Aceh." Then it concludes, "Most Pakistanis are favourably inclined to grant a lot more autonomy to the provinces than is now granted in the Constitution." It is clear that they are now willing to give us some sort of autonomy within the framework of the interests of the dominant nation and save the army from complete embarrassment, but not the status of Aceh, let alone complete freedom. It is now up to our leadership what they want? Accept their perverse autonomy or fight for a special autonomy like Aceh. In both the conditions, after all these sacrifices, we will leave our nation at the mercy of Pakistan's corrupt and brutal rulers who in the past never kept their promises or else go for complete independence and gift our nation the freedom to choose their own destiny.

October 24, 2008

( What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to the other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been brInging out a periodic "Chinese Economy Monitor" based on open information. This is the second in the series---B.Raman)

INCREASED UNCERTAINTIES, SAYS HU

At the start of the Asia-Europe Meeting (ASEM) Summit in Beijing on October 24,2008, President Hu Jintao of China said: "The fundamentals of the Chinese economy have not changed. However, the global financial crisis has noticeably increased the uncertainties and factors for instability in China's economic development.We are now confronted with many difficulties and challenges in our economic endeavours.China must first and foremost run its own affairs well. In the light of the changing domestic and international financial situation, we will make our macroeconomic regulatory measures more proactive, focused and effective and make timely adjustments to our policies.We will vigorously expand domestic demand, especially consumer demand, maintain economic financial stability and the stability of capital markets, and continue to promote sound and fast economic and social development."

2.President Hu was reported to have told his Indonesian counterpart during a bilateral meeting on October 23,2008, that the current financial turmoil was "grim.," "The current world economic situation is grim and complicated.The emerging markets and developing countries are confronted with financial risks, weak foreign demand and mounting inflation," Hu was quoted as saying.

---Source AFP

EMERGENCY FUND OF ASEAN PLUS THREE

3.South Korea, China, Japan and the 10 members of the Association of Southeast Asian Nations (ASEAN), agreed in the margins of the ASEM summit on October 24,2008,to create a US$80-billion fund to fight the global economic crisis.The agreement is the first major coordinated regional action since the financial turmoil reached full force last month. In announcing the new Asian monetary fund, a spokesman for South Korean President Lee Myung-Bak said the 13 leaders had pledged to work even more closely on economic matters. "(They) agreed on the need to strengthen regional cooperation and policy coordination in the face of the global financial crisis," the spokesman said in a statement. The US$80-billion fund would be created by the end of June next year, and be accompanied by an independent regional financial market surveillance organisation, according to the spokesman. The "ASEAN Plus Three" fund would supersede the Chiang Mai Initiative, which came into being in 2000 in the wake of the 1997/98 East Asian financial crisis to ease mainly bilateral currency swaps. Asian governments had till now mostly limited their intervention to cutting interest rates, guaranteeing bank deposits and injecting money into the credit markets - without the kind of coordinated action taken by Europe. The initial agreement called for South Korea, Japan and China to provide 80 per cent or US$64 billion, with ASEAN members providing the remaining US$16 billion.

-----Source AFP

APPREHENDED JOB LOSSES IN SOUTHERN CHINA---2.7 MILLION BY JANUARY

4.At least 2.7 million factory workers in southern China could lose their jobs as the global economic crisis hits the demand for electronics, toys and clothes, according to industry estimates. Nine thousand of the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen are expected to close before the Chinese New Year in late January, the Dongguan City Association of Enterprises with Foreign Investment estimates. By then, the association expects overseas demand for products from the three manufacturing hubs to have shrunk by 30 per cent, as the knock-on effects of the US housing market collapse and credit crunch filter down to Chinese workers. "I am afraid it is not going to look good on the Chinese government if the decline of the export-led industries and the unemployment problem continue to worsen," Eddie Leung, the association's President told AFP. Leung, also a member of the Chinese Manufacturers' Association, said the estimate of 2.7 million job losses was conservative, given that many of the larger factories in Guangdong province employ thousands of workers. Clement Chan, Chairman of the Federation of Hong Kong Industries, said a quarter of the 70,000 Hong Kong-owned companies in southern China, 17,500 businesses, could go to the wall by the end of January. Describing the likelihood as a "worst case scenario," he said Hong Kong firms in the region employed a total of 10 million workers, but did not want to speculate on the extent of possible job losses. While small and medium-sized factories are especially prone, the threat of lay offs looms just as large over the region's manufacturing giants, further squeezed by the appreciation of the yuan. Harry To's Mansfield Manufacturing is a classic example of the spectacular growth in China's industrial heartland over the last three decades. To started a metal business from a small room in Hong Kong in 1975. In 1991, he joined hundreds of other Hong Kong entrepreneurs moving their production across the border into China to take advantage of cheap labour and land. He now employs 8,500 workers in 11 factories in China and Europe. His six factories in Dongguan cover 140,000 square metres. To's company, which is now a subsidiary of Singapore-listed InnoTek Ltd. supplies metal components for cars, plasma televisions, printers and other electrical appliances to Japanese brands including Canon, Toshiba, Epson, Minolta and Fuji-Xerox. Business for the company, among the largest in its field in China, has grown by 40 per cent annually in recent years, but with credit being harder to come by, no manufacturer is safe, he said. "With banks being so tight on their lending policies now, bringing down a factory overnight has now become very easy." All his expansion plans have had to be put on hold. "Some of our long-time Japanese and European clients have asked us to stop producing for them in the next two to three weeks," he said. "They said they did not want to have too much stock piled up in their warehouse as demand continues to dwindle." To recently started building a new 70,000 square metre factory in Dongguan and was planning to hire 2,000 more workers later this year. But now, all work on the unfinished factory has stopped until more orders roll in. "No one would expand their business when the prospects for the entire manufacturing industry look so grim," he said. Instead of hiring more workers, To is looking at cutting 1,000 employees across his operations. But far from being downhearted, he is shifting part of the company's export-led production to developing energy-saving electrical appliances for the domestic market, which he sees as weathering the current financial turmoil. "In the long run, I am confident that mainland Chinese consumers' purchasing power will keep rising as their Western counterparts continue to lose out."

----Source AFP

TEXTILE EXPORTS DOWN

5.According to the National Development and Reform Commission, the export delivery value of the Chinese textile industry totaled 435.2 billion yuan ($63.56 billion) in the first seven months of this year, up 7.9 per cent year-on-year, but the growth rate was eight percentage points lower than the previous year. Industry experts attributed the decline to the appreciation of the yuan and the weakening demand of major consumption countries.Garment exports to the United States, one of the major importers of Chinese garments, increased by only six per cent in June. The downtrend of Chinese textile exports is expected to last in the short run. Whether it recovers or not would depend on the trend of the appreciation of the yuan and the US consumption demand. The Ministry of Finance has increased tax rebate rates on some textile and clothing exports from 11 per cent to 13 per cent from August 1.

----- Shanghai Security News as quoted in the China Daily News

REAL EASTATE: EMERGENCY MEASURES TO PRE-EMPT POSSIBLE CRASH

6.The Chinese Government has intervened vigorously in the real estate market to prevent a possible collapse. Real estate contributes to 10 per cent of China's GDP. According to Frank Gong, the analyst of JP Morgan, China's aggressive moves to boost its ailing real estate market provide a glimpse of its unrivalled position in coping with the global financial turmoi.The Government announced measures to head off a property market crash late October 22,2008, after figures released this week showed third quarter domestic product growth slowed to nine per cent, the lowest since mid-2003. "This is big news and the actions came sooner than expected probably because the third-quarter growth was worse than expected and the slowdown has proven sharper than the Government expected," Frank Gong said. With high liquidity, 1.9 trillion-dollar foreign exchange reserves and a stable currency, China has the most flexibility in the world to fend off the impact of the global financial crisis, Gong wrote in a research note. Propping up the property market, which accounts for 10 per cent of China's gross domestic product, was crucial, analysts agreed. "The direction of the residential property market will determine the direction of the Chinese economy over the next 18 months," according to Credit Suisse analyst Dong Tao."The new measures reflect the rising anxiety about growth risks," Dong said. Those measures include lifting the stamp tax on property purchases and value-added tax of land on property sales as of November, the finance ministry said. The People's Bank of China said minimum deposits and mortgage rates for first-time home buyers would be slashed starting next week. The "unambiguous all-out support from both central and local level" Governments was surprising in "both timing and magnitude", Nicole Wong, a Hong Kong-based property analyst with CLSA Research, said. This week's economic data provided the most powerful indication yet that even China's so-far invincible economy was not insulated from the global downturn, especially as fears of recession grow in the United States and Europe – key markets for Chinese manufactured goods. Since the figures were released, China has wasted no time in responding to protect housing and exports, key components of its economy that appeared vulnerable. The property policy decision was announced a day after Beijing said it would increase export tariff rebates on more than 3,000 items, or a quarter of taxable goods, to shore up its exports.

7.Beijing is tightening supervision over Chinese financial companies by requiring monthly reports on their foreign currency exposure to ensure stability amid the global turmoil.. The new rules, which take effect this month, apply to both domestic and overseas branches of Chinese financial institutions.The State Administration of Foreign Exchange will require reports on foreign exchange assets and liabilities from institutions including banks, insurers, brokerages and fund management firms as well as the national pension fund and the sovereign wealth fund.Some Chinese financial institutions are feared to have incurred "huge losses" in their foreign exchange assets amid the global credit crisis.

---- Shanghai Security News

FEARS FOR THE FUTURE

8.My comments: The Chinese economy is not yet as vulnerable as the Indian economy. The increased vulnerability of the Indian economy is due to the large flow of foreign money into the stock markets, which are now being withdrawn. The dramatic collapse of the stock market and the sensational publicity which it receives in the media have a greater psychological impact on public mood.The Chinese exposure to the vagaries of investors in the stock markets is much less as compared to India. The predominance of investment flows into the manufacturing industries in China and not into the stock markets gives its economy a larger safety net than in the case of India. However, an advantage in the case of India is that the Indian manufacturing industries had paid more attention to the domestic market than the Chinese manufacturing industries, which have been flourishing largely on exports to the US and Europe. The decline in export orders could prove more damaging to the Chinese economy than to the Indian economy because of the failure of the Chinese industries to develop the domestic market. Industries largely dependent on domestic demand are generally more stable in times of crisis than industries which become over-dependent on the foreign markets. This is the lesson, which the Chinese are learning the hard way. Unfortunately, the Indian IT companies and other businesses in the services sector have developed a large dependence on Western orders. They could suffer more than their Chinese counterparts as orders from Western financial and other business houses for IT services shrink.In India, the GDP growth rate was steady,but not spectacular. In China, it was spectauclar for years continuously at more than 10 per cent per annum. As the GDP growth rate and the export growth rate come down to single digits in China, the extra labour employed all these years to sustain the double digit growth rate will become redundant adding to the number of jobless. Reports from different sources in Guangdong and Fujian indicate that as a result of the downturn, many Hong Kong and Taiwanese--run businesses have not paid the salaries of their workers for about three months and that they may not be able to settle their back wages while retrenching them. This could cause social instability. The crisis has come at a time when China is confronted with the task of finding alternate jobs for thousands of workers who were brought into Beijing for work connected with the Olympics in the construction and the hotel sectors. They are now without jobs, with no prospect of getting one in the near future. (24-10-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )

In his recent video blog post Russia's President, Dmitry Medvedev, has addressed the global economic crisis and its impact on Russia.

Hello!

I would like to talk about the global financial crisis that is affecting the entire world. Most countries are faced with the fact that the gross errors committed by several states (especially America) have created serious problems. The U.S. financial market and its impact on the world economy are both very large. Therefore, the crisis that occurred in the U.S. has had a knock-on economic effect on virtually every country.

If this had happened five or seven years ago, perhaps the crisis would have had less of an effect on Russia. Today the situation is different: we are a country with an open economy. On the one hand, this is a great advantage for us; on the other, it compels us to react and deal with the problems faced by other leading nations. Now everyone is working on a single issue: how to extricate the world from the financial crisis and limit the damage it is causing.

What is happening in the world? The sharp decline in the availability of credit has led to a decline in demand, markets themselves have tightened up, there is less use of production capacity, workers are being laid off, which in turn leads to more reduction in demand. Investment programmes and plans for expanding production have been put on hold.

I can say in all honesty that Russia is not yet caught up in this difficult cycle. We can avoid it and we must avoid it.

Governments and central banks of major countries around the world are now doing a great deal to improve the economic situation by providing the necessary resources. We have also taken several measures that should restore confidence in the nearest future in the financial sector and normal lending. In addition, we have set in place measures aimed at sustaining retail trade, agriculture, construction, engineering and the defence industry. We are trying to help small business. Due to the drop in global demand and the difficulties involved in obtaining credit, these are the areas that require our priority support. By and large, our actions should offset these negative factors.

Gold and currency reserves and the Stabilisation Fund were set up for precisely such difficult periods. And we have an opportunity to avoid the foreign exchange, banking and debt crisis. We can meet today's challenges without losing all the potential for development that we have created.

But now it is important not only to protect ourselves from these problems, but also to make the maximum use of the opportunities created by them. And there are a lot of such opportunities.

First, inevitably, new competitive companies will emerge, also by consolidating assets in various sectors of the economy (including banking, retailing and construction). We will be ready to take the necessary measures and to provide additional funding for this purpose. Sustainability of development in these areas will contribute to the creation of new jobs.

Second, financial institutions should become more efficient and pay more attention to reliability indicators. This will improve the stability of our banking sector, making it more attractive to investors and depositors.

Third, in response to falling demand, Russian companies will have to reduce the costs of production. And to do this it is important to modernise production, technology and management as quickly as possible. This way energy efficiency and productivity can rise to the level that will compete with the most successful foreign companies. The state will support the establishment of real jobs and provide tax incentives for innovation and retraining personnel.

Fourth, we should use the current situation for modernisation in those areas where we have previously acted too slowly. This applies to education and health, judicial reform, technical regulations and the transition to digital technology.

And, finally, we must actively participate in formulating new rules of the game in the global economy, in order to maximise benefits for ourselves and to promote a new ideology that will ensure the democracy and stability of the global financial architecture. There should be more financial centres, more reserve currencies and more mechanisms for collective decision-making (I mentioned it quite a few times). This would be beneficial for everyone – for us and for our partners.

On November 15 the heads of the world's leading states will meet in Washington to discuss these issues. Russia intends to actively promote its ideas.

Let me conclude by explaining how I plan to develop my video blog. Of course I looked at your responses to the first entry from October 7. Many of you would like to post your comments. I think that this is the best kind of response. Thank you for your interest, for your interested and responsible approach to discussing topics that are important for our entire society.

It is really great and we are definitely going to develop this interactive dialogue. But please understand that it is difficult to process large amounts of incoming information. Since we take this seriously, at least no less seriously than you do, we must be prepared. By the way, you can already write to me now, including through this site.

MOSCOW. (Andrei Kislyakov for RIA Novosti) - China is going to play a major role in the global space exploration program. Soon, a new center for space research may emerge in the Eastern hemisphere and push the current players aside.

China's achievements in science and technology, as well as its consolidation of space programs in the countries of the Asia-Pacific region, which have a tremendous economic potential, will contribute to its development.

At the 59th International Astronautical Congress in Glasgow, on October 2, Sun Laiyan, chief of the China National Space Administration, announced that China was prepared to lead the Asia-Pacific Space Cooperation Organization (APSCO).

No doubt the participating world leaders in space research, representing the United States, Russia and Europe, did not underestimate the significance and far-reaching consequences of the Chinese initiative.

Formally, APSCO was established by China, Thailand and Pakistan back in 1992. On October 28, 2005 China, Mongolia, Pakistan, Thailand, Iran, Peru, Bangladesh and Indonesia signed the APSCO Convention, shortly followed by Turkey. Argentina, Philippines, Malaysia and Ukraine may join the organization in the foreseeable future.

The participation of China, Pakistan and Iran, with their dynamically developing missile programs, will turn APSCO into an authoritative high-tech group. Such members of the organization as Thailand and Indonesia have already launched their own satellites. Thus, with China as its leader, the organization has a good chance of becoming very successful.

Although China has been following the initiatives of world leaders in space exploration, it has been making new technological breakthroughs. Three successful manned flights have inspired Beijing to build its own orbital laboratory. At the same time Beijing is making progress in developing a new generation of carrier rockets, a program of outer space exploration, including launching an artificial Moon satellite and preparing for a manned expedition to the Moon.

China's success in space exploration and its leadership in the Asia-Pacific region are evident. If backed up by the potential of APSCO, Beijing may turn into a leading global space power.

While the space exploration programs within the Asia-Pacific region are gaining pace, NASA, the Russian Federal Space Agency (Roscosmos) and the European Space Agency (ESA) cannot decide on a shared direction for their joint space programs. In spite of encouraging official statements on the need to promote international cooperation in space exploration, both the United States and Europe are set on carrying out their own research, as well as getting useful information to ensure their strategic independence and safety.

A good example of such policy is NASA's Constellation Program aimed at developing U.S. space technologies for conducting large-scale space exploration, which does not envisage participation of other countries.

Another project of this kind is the U.S.-Russian International Space Station (ISS) program. Despite NASA's public statements, the United States see the use of Russian spaceships as a forced measure. In addition, NASA has failed to clearly formulate its vision of the ISS future once the Space Shuttle Program is over.

Cooperation between Russia and Europe in space is less dramatic and has not resulted in any impressive joint programs. The declared Roscosmos - ESA program of developing a new space shuttle system has not seen any practical steps yet. Moreover, EU Industry Commissioner Guenter Verheugen said in late September that any dependence on "the Russians" in organizing manned flights would be unacceptable.

However, in terms of finance and technology, space exploration programs are hard to implement without the involvement of other countries. As Andrei Ionin, a corresponding member of the Tsiolkovsky Russian Academy of Cosmonautics, puts it: "Today we must think about who our key partners in space exploration are. This may be the right moment to start looking eastward, rather than westward. Centers of economic, technological and political power have been shifting to the Asia-Pacific region, where China, Japan and South Korea are experiencing dynamic development."

Once APSCO has advanced to the practical stage, there will be another reason for "looking eastward."

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

While America lectures Russia on the 1932-33 famine in Ukraine, Russian historian Boris Borisov asks what became of over seven million American citizens who disappeared from US population records in the 1930s.

RT: What made you research the history of what you call ‘American Holodomor’?

B.B: It was very simple. As I was doing comparative research of the American Great Depression in the 1930s, and the Great Depression of the 1990s in Russia, I grew interested in the social dimension of the tragedy. It was logical that I looked up official American documents and found out that the discrepancies were so obvious that any independent researcher would not but have doubt about the official U.S. statistic data. All appears to be rather interesting. I will come to that later.

The U.S. Congress added fuel to the fire by adopting resolutions nearly every year blaming the Soviet government for alleged staged famine in the 1930s in Ukraine. The first resolution came in 1988, 50 years after the events described. The current members of Congress wonder about the following, and I quote, “people in the government were aware of what was going on, but did not do anything to help the starving”.

At that very period of 1930s, the wealthy city of New York saw kilometre-long lines of people for free soup. There were no queues on the city’s main streets though, but not because there were no hungry people but because most of the cities did not have any money – they were just bankrupt.

So, I became curious about that and carried out some research that brought about interesting results.

RT: You say that America of the early 1930s made over seven million people perish. It’s a horrifying figure and it needs an explanation. What do you base your research on and why do you say the population statistics of the U.S. government of 1932-33 was falsified?

B.B.: Seven and a half million people does not mean the number of particular victims of the famine, but a general demographic loss, or the difference between the supposed population on the date of the census that was due to be held in 1940 and the factual number of people. In reality, the total demographic loss is bigger. The fact is not contested by anyone. The figure is more than ten million people.

However, when you start researching the subject, you find that there is a migration component – people were coming to the country and leaving. All can be calculated. It turns out then, that three million people can be subtracted at the cost of migration – in approximate figures, as it is not a scientific report.

What’s left is 7.5 million people still missing. The question is: where are they?

Voluntary defenders of U.S. values who venture to discuss the matter with me, normally begin with a statement that those people were simply not born. However, if we take the age pyramid and distribute the people according to their dates of birth, it becomes apparent that 5.5 million children and two million grown-ups are missing from the 7.5 million. So, those two million people could not have been non-existent – as they had been born. They could only die.

As a result, I consider the two million of grown-up victims as the limit proved from the bottom – for 10 years, let me emphasise this.

Could the remaining children out of those 5.5 not have been born? The U.S. statistics does not answer this question. If we use the method of international juxtapositions and see how demography reacted to similar disastrous events in other countries, we will see that the distribution of the demographic was divided between the children who had died and had not been born in the ratio of Ѕ to Ѕ. In other words, it’s from 2 to 4 million extra losses.

The overall loss in ten years could be estimated as being from four - or slightly fewer - to six - or slightly more - million.

Let me quote some figures, if you don’t mind – demonstrating how other countries reacted to the similar situation. If you believe that four or six million people is a terrible number, let me quote this: male mortality rate in Russia: 810,000 in 1984; 1,226,000 in 1994 - whereas the population is the same. In other words, as compared with 1984, the year 1996 had an additional number of 416,000 dead males. You have to add females and children to that figure.

As of now the prevalence of the death rate over birth rate yet remains, although smaller. Some say it is horrible, others say it’s normal as the country is developing. So there are different takes about there being half a million dead. Nobody tears his or her hair out to discuss this.

Likewise, there were opposing viewpoints in the USA. Some said it was horrible – “We had millions of people deprived of their land!” – those who read Steinbeck well knew the situation from his documentary-authentic novels depicting starving children. Others say, “No, it’s all right. We’re fighting depression and all is as scheduled.” Like here today, I think.

RT: Imagine the so-called “hungry marches” in the times of President Hoover and quote memories of a child about those events. Did you actually find any survivors still alive to tell the story and confirm the fact of ‘American Holodomor’?

B.B.: Let me draw your attention to the fact that it was not me who called those marches “hunger marches”. They were called so by the participants. When someone goes marching in protest against war, they protest against war because people get killed there. When someone protests against hunger, it means they protest against dying of starvation, and the people are ready for social unrest. You may know that not only the police but also regular military troops were used to disperse those marches.

There is a huge amount of evidence. Let me quote some. For example. The thing is that in summer an article by Dmitriy Lyskov was published in the English translation, with some conclusions drawn from my research. That caused active discussion in English-language blogs, also in the USA, which is understandable.

What do Americans write in their stories? Just three quotes:

1) The ancient members of my family told me how people used to come to the door asking to do a day’s work for only a meal.

2) If this story is true and our federal government knew the enormity of the crisis during the 30s, then it might explain their silence about the famine in Ukraine during the same time.

3) It's a good argument... I heard lots of stories about the Depression from all my relatives, and especially from my mother and father. People were starving, I don’t dispute that. But I don’t think it would have been seven million.

We can see flat ideological statements about democracy and freedom in the USA then, therefore such things just could not have been there. However, we have authentic stories, so numerous that one could make volumes out of them and put them on a shelf.

RT: Such outstanding historical moments are usually reflected in literature, films, and, of course, journalist reports and research articles. The American depression is definitely one of those remarkable periods. Is there any proof of your theory in an article of a newspaper of that time?

B.B.: They did write about it, of course, but in a style similar to that used in our newspapers about the 1990s. They criticised the government, parties fought each other, someone criticised local authorities, someone insisted on their programmes, others on the opposite. As a whole, however, the bigger picture of the epoch will be seen only in a while. As for sources, they can be used for reference about those real events that were happening there.

Of course, journalists may be interested in a fact about a tractor that pulled down a farm. There are many facts of this kind – Steinbeck eloquently tells a lot about such things. But as to what happened to that farm later, the fact being that ten people left but only eight came back, is seldom told – both then and now. It’s not something of big interest to journalists.

For instance, who died in your family in the past two years?

You must bear in mind that those who died are in the lowest stratum of the American society – either had been poor, or became poor and failed to get out of this level. Try to find research details about the death rate among homeless people in Russia now – you will encounter big difficulties. You may find, but that may take a long time. And you will hardly find anything in newspapers, despite the fact that mortality among the homeless is there. And it’s about citizens of Russia and most likely the number of those dying is big. Perhaps the factor that not all of them volunteered to become homeless is the answer.

RT: In your article, you write about the agrarian business lobby you claim is guilty of destroying the state food resources. Can you please tell more about it and maybe compare it to any instance of more recent economic wars or lobbies, maybe?

B.B.: The modern example is obvious – it’s a modern programme of producing fuel from food. It’s not by chance, that the Cuban leader Fidel Castro raised this question, thus dotting the ‘i’s’ and crossing the ‘t’s’. As a matter of fact, producing fuel from food is something to enrich someone, whereas impoverishing dozens of millions of others. The process is already there and the current increase of food prices is already causing political unrest and more deaths. Medical specialists don't do this in third-world countries nor in rich countries so far. The process is under way. Unless stopped, by the end of the 21st century, the programme of obtaining fuel from food will be studied in history books on pages next to Hitler and concentration camps. The scale of the consequences would be comparable, in terms of the number of victims.

This is what concerns the current situation.

RT: We had these discussions in the time of chaos and depression in the world’s financial markets. Hundreds of people are losing their jobs, credits are not paid back, the mortgage crisis is on. As an economist, do you see this as the beginning of a new great depression and, actually, a new Holodomor?

B.B.: Comparing the current crisis with the Great Depression has become commonplace in economic discussions. I would rather not over-load you with some economic terms but let me give you a simple example. The modern crisis radically differs from the one in the early 20th century. Whereas that crisis was of an industrial society, this one is of a post-industrial society and the economy of services.

What does that mean? Imagine yourself a highly-paid specialist in securities. You strike deals and earn a lot. You’re sure you’re worth it, because the deals yield good profits. Who do you need? A legal adviser. Many of them, with an office, secretaries, clerks – all of whom help you not to lose your money and do your business. Who do the legal advisers need? They need bank employees who take their lucrative salaries and deposit them at advantageous terms. This is what makes up the first financial circle.

The first circle is followed by another one, where people need property dealers, as they are very busy themselves and would not build homes on their own. They would need a tourist agent to quickly arrange that their bottoms could be warmed up in Hawaii. And they need transfer agents to arrange all the transportation.

Then follows the third circle of the services industry – including cafes where the guys from the first and second circles have coffee, restaurant where they dine, fitness centres to make them fit sometimes – an they're necessary in the centre of the city, because they cannot afford getting away from the money source spring as someone else can crawl up and scoop from it. Ninety per cent of the fee is taken by the rent of the premises in the prestigious locations.

All the rest is arranged likewise.

Now, imagine that the stock market has collapsed. You have no job and no revenue. So you pack to leave – Lehman Brothers all pack. You don’t need legal advisers anymore. If you do, however, you have no money to pay them with. No bank specialists are required. That is followed by no need for a property agent, and all the rest down the chain.

What have we got as a result? In an industrial economy, an enterprise has some safety factor – some reserves, long-term contracts, some property they can sell or mortgage at the end of the day. There is no such safety margin in the services industry. As soon as the money source stops, the services industry rumbles like a house of cards.

So, things may be developing now much faster than in the pre-WWII times. This is what we can see happening now during a very short period of time, much shorter than in the time of the Great Depression, major financial institutions collapsed, which set the alarm bells ringing, as French President Sarkozy put it, making the economy a little smarter. This is well understood by the leaders, but nobody says how to do this.

October 23, 2008

Increase DecreaseOctober 20, 2008 (LPAC)--Lyndon LaRouche was interviewed live today via satellite for a television broadcast on "India This Week,'' a prime time weekly news program on India's best and most watched TV channel, NDTV. The program was aired live on national TV at 9 PM India time, with an estimated 11 to 15 million viewers. LaRouche was introduced as a former U.S. Democratic Presidential candidate, and pictured in front of the White House during the interview conducted by news anchor Natasha Jog in New Delhi. LaRouche then responded to questions.

On the subject of global financial collapse:

LaRouche: "We're in a crisis which is comparable in category, to what happened in Europe in the 14th century with what was called the New Dark Age. This is a crisis immediately caused by the quadrillions of dollars, outstanding obligations in the derivatives category. And the system is crashing; it's going to a terminal end unless an immediate reform is made, which will involve a number of countries coming to an agreement, around the idea of what's called a New Bretton Woods. Without that, we're headed for a New Dark Age.''

On the question of this being the biggest collapse in modern history:

LaRouche: "Absolutely, unless we stop it. We can stop it. But if we don't take the measures necessary to stop it, we shall be in a breakdown crisis of civilization globally.''

On the subject of a bailout:

LaRouche: "There is no possibility that a bailout would work. You're in a situation which is comparable, in some features, to Germany 1923, in which you're caught between hyperinflation, and collapse. And slight movements will move things in one way or the other. We could move to an immediate collapse, at almost any time. That is, a breakdown crisis of the system. We were very close to it recently in the United States--this is global.

We could also come to an agreement, particularly among the United States, Russia, China, and India--as initiating partners--to get out of this mess.''

On the subject of a new international financial agreement:

LaRouche: "Without that agreement, which has to include also Russia and the United States, it's not possible, in time, to save the world system.''

On the subject of what LaRouche would do:LaRouche: "I'd do what I'm already doing. I would go to Russia and propose that they take the initiative in conjunction with China and India, and other countries, but those countries in particular, to approach the United States, on the idea of a New Bretton Woods Conference. Under those conditions, we can mobilize the planet, sufficiently, to stop this crisis.''

(What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to the other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative consequences of the down-turn in the Chinese economy. Keeping this in view, we intend bringing out a periodic "Chinese Economy Monitor" based on open information. Here goes the first Monitor in the series---B. Raman)

Citic Pacific Faces Enquiry

The Securities and Futures Commission (SFC) of Hong Kong announced on October 22,2008, that it has undertaken an enquiry into the affairs of the Citic Pacific, the Hong Kong listed branch of the China International Trust and Investment Corporation, following a report submitted by the Citic Pacific to the Hong Kong Stock Exchange on October 20, allegedly admitting that two of its senior executives had entered into unauthorised foreign exchange forward contracts in Euros and Australian dollars, which have already resulted in a loss of US $ 104 million, with a possibility of further losses, which could run up to another US $ 200 million. Among those reportedly facing enquiry are a Finance Director of the Company and the daughter of the Chairman of the company, who occupied a senior position in the company. It has been reported that pending the enquiry she has already been demoted. Albert Ho, a member of the Hong Kong Legislative Assembly, has accused the company of concealing this information from the investors. The Citic Pacific has reportedly admitted that it became aware of this unauthorised transaction on September 7. According to Ho, the company did not mention this in a circular issued by it to the investors on September 12. The prices of the shares of the company fell by 55 per cent on October 21 and by another 10 per cent on October 22.---- Source Agence France Presse (AFP).

Toy Industry In A Crisis

2. Another toy factory in China catering to the US market went bankrupt on October 22 and closed down its production, rendering 900 workers jobless. The toy factory is called the Chong Yik Toy company. It is owned by a Hong Kong businessman and is based in Shenzhen in the Guangdong province. Some of the workers have alleged that they were not paid their salaries for the last four months. Some payments were made to them by the company as well as the local Chinese authorities at the time of the termination of their services. Last week, the Hong Kong listed Smart Union Toys factory in Dongguan in the Guangdong province closed down after terminating the services of 7000 workers. According to the Xinhua news agency, in the first seven months of this year, 3631 small scale enterprises producing toys mainly for the US market have closed down due to a decline in the demand for China-made toys from the US. These enterprises, which have closed down, constituted 52.7 per cent of all toy-making companies in China--- Source "South China Morning Post" and AFP.

Shipping Companies Face Difficulties

3. After the aviation industry, the shipping industry is facing a crisis due to a decrease in demand for cargo space. Share prices of some major shipping companies, which haul bulk freight such as iron ore, coal and grains, have fallen by 50-70 per cent in the past few months. "The global economic slowdown will push some shipping lines into bankruptcy," Marc Faber, a famed investor and editor of the "Gloom Boom & Doom" report, told AFP. Standard & Poor's also said this week that the Asian shipping market has suffered double-digit declines on the US-Asia route in June and July, as well as being hit with higher operating costs. There are reports of idle vessels being put to anchor, and question marks over the many orders for new ships that were placed in brighter times, years ahead of expected completion dates. "Pain levels could be high for companies that agreed to pay 2007 top-dollar prices for dry bulk ships, or who agreed to pay high long-term charters," said an article in the Far Eastern Economic Review this month. Container shipping was hit first earlier this year as demand for Asian-made goods in the US and Europe dropped off. In a chain reaction, Asian factories manufacturing electronics and consumer items for the US and European markets began lowering output, and the need for raw materials has declined. Container shippers, bulk operators and port authorities across the region are reporting slowdowns. Malaysia's Port Klang said it had been hit by a decline in cargo handling since the start of October, due to a retail downturn and lower vehicle sales in the US and Europe. The Shanghai International Port has said that growth in cargo traffic dropped sharply to 9.9 per cent in the first half of 2008 on the "increasingly grave global economy and trade situation". "Faced with the severe economic situation at home and abroad, the port industry has met with the most complicated operation environment in recent years," it said. Hong Kong, which is sensitive to any drop in demand for toys, gadgets and clothes made in the factory-belt of China's southern Guangdong province, said that after an increase of 6.7 per cent in container traffic in August, growth dropped suddenly in September to just 1.2 per cent. "Given the global gloomy economic outlook, Hong Kong is expected to face a much tougher export trade environment," said Hong Kong Container Terminal Operators Association chairman Alan Lee. In Taiwan's seven harbours, volumes fell 2.23 per cent in the nine months to September, and in southern Kaohsiung city, business was down 1.76 per cent. "We are seeing a rapid decline in the volume of exports," an official with the Japanese Shipowners' Association said of the decline in demand. Shipping rates have been falling to levels s not seen since the Asian financial crisis in 1997-1998.A so-called capesize vessel, most commonly used to carry coal and iron ore, now costs under US$11,000 a day to hire, about half the charge in May. Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight per cent in 2008. "It's a safe statement that no carrier is operating profitably in the eastbound transpacific market today," said Ron Widdows, chairman of the Transpacific Stabilisation Agreement - a forum of major shipping lines. However, the group said vessels are still running at 90 per cent capacity as firms cut costs by consolidating routes and returning chartered vessels, and take advantage of the downturn to lay up ships for repairs. Widdows said the industry was confident that government efforts to unclog global finance would be effective, restoring confidence and paving the way for a shipping recovery in late 2009.---- Source AFP

Container Traffic Down

4. Shanghai's port, one of the world's busiest, has cut its container traffic target for the year by five per cent, blaming the global financial crisis and an economic slowdown. The Shanghai International Port Group's handling volume is expected to reach 28.5 million twenty-foot equivalent units (TEU), less than its earlier target of 30 million TEU. Lower trade volume due to the weakening global economy, slowing domestic growth and natural disasters in China this year have affected the port's container operations. China's economy expanded by nine per cent in the third quarter, the lowest level in about five years as the global credit crisis put a dent in its booming economy. The port operator's container throughput rose 10.4 per cent from a year earlier to 13.82 million TEU in the first half, sharply slower than the growth in 2007, when throughput jumped 20.4 per cent to 26.2 million TEU. In the first nine months of 2008, container processing in Chinese ports rose 14.9 per cent to 94.5 million TEU, 2.2 per cent lower than the first half, according to Ministry of Transport figures.--- Source "Shanghai Securities News" and AFP.

Move For Financial Watchdog

5.Japan, China and South Korea will set up an Asian watchdog body to monitor the health of financial institutions in a bid to counter global economic chaos.They hope to have the first meeting in Tokyo next month and also invite other Asian nations including the 10 members of the Association of Southeast Asian Nations (ASEAN).It would serve as a regional version of the Financial Stability Forum, a panel that advises the Group of Seven major economies and exchanges information among them. Japan also hopes the meeting would discuss enhancing controls on the financial system. The move came as US and European leaders called for an emergency summit in November to discuss ways to restore the battered global financial sector. Japanese Prime Minister Taro Aso is also sounding out whether the South Korean and Chinese leaders can travel to Japan by the end of the year for an inaugural three-way economic summit. Japanese Government officials declined to comment on the reports. ---Source "Yomiuri Shimbun" and the Kyodo news agency.

Real Estate

6. China will exempt property transactions from stamp tax and value-added tax from November 1 to boost the ailing real estate market, state media reported on October 22, citing the Finance Ministry.

Impact On Sino-Indian Trade

My comment: The down-turn in the Chinese economy is likely to affect Sino-Indian bilateral trade which has galloped to a record US $ 30 billion and could affect Indian iron ore producers. Iron ore constitutes about 55 per cent of Indian exports to China. With the Olympics over and with the sluggish real estate market and a suspension of the construction of new factories, the demand for steel in China could come down.

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com)

A debate is now in progress among major Asia-Pacific nations on what should be the ultimate regional security architecture. This is happening at a time when fast-growing trade linkages and deepening cooperation through various integration mechanisms have already been transforming the region’s economic and political landscape. The debate itself certainly looks like a response to the rising impact on the region from a combination of traditional and non-traditional security threats; its objective is also becoming clear - progressing towards evolving a new security mechanism for the whole region, supplanting the existing various sub-regional groupings. In this process, the centrality, which the People’s Republic of China (PRC), a fast rising regional and global player, would occupy, may not be difficult to imagine.

Beijing’s emerging views of a regional architecture, as expected, are closely linked to its own security perceptions and it cannot be denied that the same is the case with other key Asia-Pacific powers, like Japan, ASEAN, Australia, the US and India. As views vary, intra-regional differences on the subject being noticed appear normal. However, it is important to see how the final picture will emerge. In the ensuing paragraphs, an attempt has been made to trace various positions and analyse their likely implications for the evolution of a regional security mechanism, acceptable to all concerned nations.

China Beijing’s stated vision is to establish ‘harmony’ in Asia-Pacific region; to achieve this, it has proposed a regional security cooperation concept featuring ‘equality, mutual benefit, openness and practicality’ and according ‘due role’ to ASEAN Regional Forum (ARF) Security Policy Conferences. In its view, in parallel to the pursuit of such cooperation, the existing regional and sub-regional cooperation mechanisms need to be developed[1]. Seeking to explain its ‘harmony’ goal above in strategic terms, the PRC thinks that ‘ peace is a product of parity, balance of power and offensive and defensive strengths’ and that no action should be taken sacrificing security interest of one country while achieving security in other nations. In this context, it believes that there should be no expansion of military alliances and deployment of missile defence system in the region; ‘missile defence partnership in some areas would be detrimental to strategic balance, confidence building and regional stability’[2]. China also stresses the connectivity between regional security and its ‘new thinking’ on security, based on ‘mutual trust, mutual benefit, quality and coordination’[3]. It believes in the ‘non-exclusive’ nature of regional cooperation and in drawing on the development practices of other regions[4]

Japan Japan’s official position is to accept the need for a ‘multilateral collective defence security mechanism’ in the Asia-Pacific region, similar to the North Atlantic Treaty Organisation (NATO) in Europe. Tokyo, at the same time, admits problems in this regard due to the existing ‘diversity in the region’s political and economic systems, cultures and ethnicities’. Under the circumstances, Japan seems to prefer a short-term approach aimed at ‘strengthening the existing multi-layer frameworks for bilateral and multilateral dialogue, while securing the presence and engagement of the US in the region’.[5] It gives emphasis on the ‘synergy between Japan-US Security alliance and Tokyo’s Asian diplomacy’. Japan also feels that the ‘balance of power’ factor could be significant in the changing regional security environment, but reaching ‘mutual understanding’ among countries concerned is essential in this regard. Tokyo does not treat China as a threat to Japan, but wants Beijing to enhance the transparency of its military capabilities and their purpose[6]. Some scholars in Japan have been more specific than the government on regional security mechanism. They have stressed the need for an “East Asia Security Forum” consisting of core states (ASEAN plus 6 including India, along with the US). The Forum, in their view, should reflect the principle of ‘inclusive multilateralism’ and ‘cooperative security’. On China, they recommend a ‘cautious’ Japanese engagement with that country, ‘predicated on traditional balance of power approach’ and for this purpose, foresee a ‘consolidation of strategic links between the four largest democratic states – Japan, India, Australia and the US.[7]

ASEAN The ASEAN views itself as the ‘centre’ of the regional security architecture[8]. It visualizes the roles of a ‘facilitator’ and ‘honest broker’ to itself for the architecture, citing the reason that ASEAN nations enjoy a ‘pivotal geographic position’, providing a ‘neutral ground where powers with intersecting interests meet’. It hopes that the architecture could be shaped as the existing various structures like the East Asia Summits, Shangrila Dialogue and ASEAN Defence Ministers meetings, continue to evolve. The ASEAN identifies “three principles” to guide the development of an effective architecture- regional security is collective responsibility of all countries that have a stake in the region’s security, the architecture should be ‘open and inclusive’ and regional cooperation should be based on mutual respect and be in accordance with international law[9].

Australia

Australia stands for creation of an ‘Asia-Pacific Community’ by 2020, a body similar to the European Union, to span the entire region including itself, the US, Japan, China, India, Indonesia and other regional powers; it visualizes a charter for such Community -engaging in a ‘ a full spectrum of dialogue, cooperation and action in economic and political matters and future challenges relating to security’. Canberra’s concept has two premises- the global economic and strategic weight is shifting to Asia and the existing fora like ASEAN were not designed to promote cooperation across the entire region, due to the ‘greater diversity’ in the region’s political systems and economic structures[10]. It finds a remedy to the situation in the proposed Community which could ‘enhance the region’s “fragmented” security and political cooperation as well as help resolve a number of regional conflicts, including on Taiwan, Kashmir and North Korea.[11] China promptly welcomed the proposal by saying that the latter is in line with its hope for joint efforts in the region to ‘enhance exchanges and mutual political trust as well as deepen mutually beneficial cooperation, for achieving common development’[12].

The US The US acknowledges the ‘provisional’ nature of efforts to find a new Asia-Pacific security architecture and welcomes the ASEAN leadership in this search. It assures continued commitment to the region as a ‘resident’ power as its ‘sovereign’ territory stretches from the Aleutian Islands to Guam in the Western Pacific. While discussions on a new security architecture progress further, Washington in the meantime, would like to institutionalise the various existing forums to deal with the ‘region- specific’ problems and depend on its ‘time-tested’ architecture involving ‘alliances’ (with Japan, South Korea, Philippines and Thailand) and “partner-nation capacity building” (with India and Vietnam), the latter being described as a ‘new thinking in US overall defence strategy’. As per the declared US benchmarks for building new security architecture, that process should not be a ‘zero sum game’ and exclusion of any single country would mean ignoring the reality of Asia’s security today. Besides, ‘the entire region should be treated as a single entity and that there should be no separate East Asian order’.[13]

India In New Delhi’s formulations, Asian security cannot be looked in isolation from the region’s broader political and economic aspects. To accommodate Asia’s ‘diversity’, a ‘pluralistic security order’ based on a ‘cooperative’ approach is a must. Under such ‘polycentric’ security, each participant will have ‘equal stake and responsibility’. India believes that the order must be ‘open and inclusive’ and take into account the conditions prevailing in Asia. There should be no transplant of ideas from other parts of the world and any sub-regional security arrangements that are narrow and ultimately ineffective, should not be created. The building blocks for the new framework could be dialogue forums like ARF, Comprehensive International Cooperative Association (CICA) and Shanghai Cooperation Organization (SCO). [14]

Positional analysis A comparative analysis of the positions of major Asia-Pacific players on the regional security architecture reveals divisions among them on the following issues:

· Participation of the US:

The term ‘open and inclusive’ is missing in Chinese formulations. By implication, it would mean Chinese wariness to the US participation in the architecture; this is despite Beijing’s support, albeit at its own terms, to the Australian proposal, which includes the US. On the other hand, a near-unanimity prevails among other nations on the US role. The US itself is against ‘any zero sum game’ and exclusion of any country in the region. It may not be happy with its existing exclusion from regional bodies like the East Asia Summit, Shanghai Cooperation Organization and India-China-Russia trilateral dialogue. Japan, on its part, is firm in backing the US ‘presence and engagement’ in the region. ASEAN, by insisting on ‘collective responsibility of all states that have a stake in the region’s security’, has indicated its approval to the US involvement. India’s formula of an ‘open and inclusive’ architecture, also reflects a stand welcoming the US.

· US alliances in Asia

The US and Japan on one side and China on the other, are clearly at odds at each other on the issue of American alliances in Asia. Washington’s emphasis on its ‘tested alliances’ in the region and Japan’s vision of ‘synergy between US-Japan alliance and Tokyo’s Asian diplomacy’ stand in contrast to Beijing’s perception that the US-led alliance in Asia is detrimental to ‘strategic balance’ in the region.

· Who should lead the architecture?

On this issue, India and Japan seem to be on the same side; India’s ‘polycentric’ approach matches with Japan’s line to set up a ‘multilateral collective security mechanism’. In comparison, ASEAN tends to stress its own ‘centrality’ in the architecture; Chinese formulations are silent on the subject; however, their mention of ‘parity’, ‘equality’ and ‘balance of power’ and prescription that the security of one nation should not be sacrificed while ensuring the security of others, reveal Beijing’s mind on the security order- the PRC should play a central role. Beijing and Tokyo desire a ‘balance of power’, but their interpretations are different. The PRC’s intention to play a ‘pre-eminent’ role is already visible; its declaration of support to the leadership of the ASEAN plus three (including the PRC) in matters of ASEAN Regional community, but with Beijing giving ‘long term and strategic guidance’, testifies the same.

· Learning from other models

Sino-Indian divergence is apparent on this subject. In matters of regional cooperation, China is in favour of learning from outside powers; India’s stand on the other hand is to build on an existing architecture taking into account the conditions in Asia, without any transplant of ideas from other parts of the world.

· Sub-regional security arrangements

India is against creation of any ‘ineffective sub-regional security arrangements’. This may raise a question on New Delhi’s attitude towards the ASEAN’s goal of forming a Regional Community by 2015, which has a security component. Also, India, China, Japan and the US approve in varying degrees the development of the existing sub-regional organizations, till a regional architecture emerges; there seems to be a subtle difference in Australia’s attitude on this account. Canberra considers such organisations including the ARF as incapable of fully addressing the problems of the entire region and on that basis, pitches for a regional mechanism.

Concerns-Vision connectivity Differences in opinions are bound to surface in a debate. Important however would be to correlate the security concerns of each country with their respective positions on regional security architecture. Taking the case of Japan first, its perception of US alliance as key to face threats from China (mainly military modernization, resource development in East China sea), from Russia (unsettled territorial issue) and from North Korea (nuclear weapon programme) provides the underpinning for its vision of a regional order with US involvement.

ASEAN too, sees in US a security guarantor against impact from China-related potential conflicts (South China sea territorial disputes) and a balancing factor to China’s rise. This, along with threats from extremism and the contradiction between Islam and modernization in Southeast Asia, is influencing the ASEAN view of a regional security order. In regional forums where the US is not represented, ASEAN has been careful by opposing Chinese proposals likely to harm US interests. For e.g, it did not accept Beijing’s offer to join the Southeast Asia Nuclear Free Zone, which excludes the US.

For Australia, the priority for the new government led by Prime Minister Kevin Rudd is to act as a balancer of relations with China and the West and accordingly, his “Asia-Pacific Community” concept is being seen as an effort to create an institution providing for checks and balances among major powers. While alliance with the US continues to be important for it, Canberra is increasingly eyeing the economic benefits coming out of cementing relations with Beijing. China has become important for Australia for mining and agriculture exports and it has emerged as Australia’s second largest trading partner. Japan and ASEAN, on their parts, are cool to Rudd’s idea. Prime Minister Fukuda took no notice of the idea during Rudd’s visit to his country, instead he emphasized on the roles of Japan and ASEAN in Asia-Pacific. ASEAN is of the view that Rudd has deviated from the principles of his predecessor over regional integration. The re-assurance later of Prime Minister Rudd that ASEAN would continue to be the ‘core’ of existing regional architecture [15] has not been sufficient enough to clear the air.

The US perceptions of a global and regional security order are also linked with its views on the emerging world and Asia-Pacific security scenarios. In this regard, the challenges being perceived by Washington concern Iran, Iraq, Afghanistan and Russia globally and China, Myanmar and North Korea regionally. The 2008 ‘US National Defense Strategy’ identifies terrorism (Iraq and Afghanistan) as the main global threat and as a shift from strategy adopted so far to deal with that, focus being given to the use of both ‘hard’ and ‘soft’ power. China and Russia have been listed as powers which have ‘potentials’ to challenge the US-led international order. The US will strive to establish partnership with the two. But Washington will ‘hedge against Beijing’s growing military modernization and impact of its strategic choices on international security’. US interaction with China will be for long term and multidimensional.[16]. In Asia-Pacific, the US stated goal is to form “ a new Asia-Pacific Democratic Partnership”.[17]

India’s profile in the Asia-Pacific region is increasing as a result of its Look East Policy the scope of which now stands extended to wider East Asia and Pacific basin. New Delhi feels that this, coupled with growing inter-dependence between the nations, have widened India’s responsibility in the region. In its view, the nature and scope of trans-border threats are rising and issues relating to climatic change and food and energy security are also becoming important[18]. To meet the main challenges of border, maritime security and energy security, India is building its own leverages in the region; it is taking active steps like holding talks on border with China, conducting active maritime diplomacy and carrying out energy cooperation. The fact that India has become a factor in the Asia-Pacific balance of power cannot be disputed; however, a rivalry between New Delhi and Beijing seems implicit in this process. Herein lies the real meaning of New Delhi’s ‘polycentric’ approach to regional security architecture.

China’s role will be the key to setting up of a regional architecture. The current picture points to a situation of ‘Beijing versus the rest’. It is because of the significant differences between its stand and that of other nations. China’s regional security concerns, as can be seen from various official documents and pronouncements, relate to ‘still not properly solved territorial and maritime disputes, Taiwan issue, the ‘ three evils’ of terrorism, ethnic separatism and religious extremism and threats to sea lanes of communication. Beijing also sees challenges in the US alliances and deployment of missile systems in the region, weaponisation of outer space and nuclear proliferation. It looks at with strong suspicions the US role in the region, particularly its ties with Japan and India as reflecting attempts to ‘contain’ China. The quadrilateral concept of ‘alliance of democracies’ (Japan, Australia, US and India) and the joint ‘Malabar’ military exercises by these nations have been the principal Chinese targets. Beijing also thinks that the Indo-US civil nuclear cooperation agreement is against the interests of the international non-proliferation regime and that India’s nuclear programme is a security threat for China.

Signs of China’s hesitation to give a leading role to India in regional integration are not difficult to see. For e.g, India’s regional cooperation policy is being criticised by China for its alleged aim to control the Malacca straits. [19] On formation of the proposed ASEAN Regional Community also, Beijing visualises no role for India[20]; it instead wants to play a ‘guiding’ role to ASEAN plus 3 in this regard. Regarding East Asia summits, the PRC is only willing to accept India (also Australia and New Zealand) as ‘outsider’ member. The Chinese position being seen on India runs counter to what President Hu Jintao said in India (November 2006) – “ Both China and India positively view each others’ participation in Asian inter- regional, regional and sub-regional cooperation process”. It is not surprising that concerns of Beijing as above, are finding an echo in the Chinese vision for a regional architecture.

Conclusion The PRC appears to believe that its concerns can effectively be dealt with only by a security order led by it; this despite its ‘rhetoric’ on ‘equality and parity’ in the order. Beijing, in this regard, sees the US as principal challenger and this imposes on China the necessity to have an Asia-Pacific strategy aimed at limiting the US power and influence in the region and thereby rising as a dominant regional power. Japan and nations in Southeast Asia (especially Malaysia, Singapore, Thailand and the Philippines, which have increased their military ties with the US) are, on the other hand, looking at the US for balancing China’s rise and stabilizing regional security. India, on its part, is giving equal importance to confidence building with China and strengthening partnership with the US, besides getting closer to other regional powers with clout, like Japan, ASEAN etc. Especially, it does not want to be seen as belonging to any anti-China grouping; but it is clear that Beijing suspects New Delhi’s pro-US tilt. What is being witnessed in the ultimate sense is a Sino-US competition, complicating the regional geo-politics. Suffice it to conclude that all the major powers involved, the US, China, Japan and India face a heavy responsibility in creating the much-needed regional security architecture, acceptable to all sides.

(Based on paper presented by D .S. Rajan, at International Seminar on “ India and Asia-Pacific- Convergence and Divergence”, held at Tirupati, 13-15 October 2008, under the auspices of Sri Venkateswara University, Tirupati, Andhra Pradesh, India. He is the Director of Chennai Centre for China Studies, Chennai, India.Email: dsrajan@gmail.com)

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